AI Stocks Cool Off… The Power Trade Heats Up

Today's sell-off wasn’t what it may have seemed… AI stocks take a breather… It started in South Korea… The next phase of the boom… The energy creators are in demand…

Rotation is afoot...

If you only looked at the returns of the major U.S. indexes, today might have looked like an "everything is down" day.

The tech-heavy Nasdaq Composite Index was down the most, by more than 2%. The benchmark S&P 500 Index was down by more than 1%... and AI bellwether Nvidia (NVDA) lost around 4%.

But not everything was down. Far from it.

The effects of market concentration – like the 10 largest stocks in the S&P 500 making up more than 40% of the market-cap-weighted U.S. index – go both ways.

While many top semiconductor and AI names fell substantially, dragging down the tech-heavy indexes, almost 600 of the large-cap Russell 1000 stocks and two-thirds of the small-cap Russell 2000 stocks finished higher.

Today, the equal-weight S&P 500 was down only 0.3%.

Seven of the 11 major S&P 500 sectors were higher, led by consumer staples (up almost 2%) and real estate (up more than 1%). Healthcare, which we wrote about being due for a rebound last week, also gained more than 1%.

In short, we're seeing investors rotate from some sectors to others. Overall, rotation can be a sign of a healthy market.

Oil futures and bond yields also continued to drop today, with the market believing the largest disruptions to the global oil supply are in the rearview mirror.

Today, the International Maritime Organization said a U.S. and Iranian-backed "evacuation plan" for ships and 11,000 seafarers stuck in the Persian Gulf is set to begin. Two temporary routes through the Strait of Hormuz will be used since the main route is thought to be mined.

As for the selling, it started in South Korea...

Semiconductors and the tech sector have been due for a cooldown after a blistering 50% run from late March to a high earlier this month. You can find many examples of overheated AI trades.

One of them came to the forefront today...

As we reported in the June 2 Digest, South Korean semiconductor stocks have been in a "Melt Up" of their own...

South Korea's KOSPI Index – which tracks the largest companies on the country's exchange – has already more than doubled so far in 2026. Over the past 12 months, the index has more than tripled.

It's all thanks to AI – specifically, memory chips.

South Korea accounts for more than 60% of the global memory-chip manufacturing market. And two of the largest memory-chip makers – Samsung and SK Hynix – represent more than 50% of the KOSPI's weighting.

Those two stocks alone have been on a tear... SK Hynix is up about 250% this year, while Samsung is up 180%.

As we wrote then, Stansberry Research senior analyst Brett Eversole warned that South Korean stocks had limited historical upside. Coupled with the risk from buying near a market top, it was a good reason to stay on the sidelines.

Today, SK Hynix lost more than 12%, and the KOSPI declined 10%. That sentiment carried over into the U.S. markets. When U.S. markets opened, stocks like Micron Technology (MU) traded lower, and MU finished the day down 13%. The VanEck Semiconductor Fund (SMH) lost roughly 7%.

In a similar vein, Brett wrote in this morning's DailyWealth e-letter that prices of copper – the base metal that also represents the AI boom, given its use in data centers – were up more than 30% over the past year and at all-time highs.

Sentiment has turned greedy on the trade. Speculative traders are "extremely bullish," as Brett shared today, saying "we could soon see a top." Prices were down almost 4% today.

So today qualifies as a breather... and rotation, which is a sign that the entire market isn't falling.

The latest AI-energy partnership...

While buzzy semiconductor names might be losing ground in the market, the fundamental story of AI continues to develop. And the technology's impact on the real economy is expanding – creating opportunities for investors.

Yesterday, for instance, Microsoft (MSFT) and Chevron (CVX) announced a major agreement. Chevron will supply Microsoft's Project Kilby data center in Texas with natural gas for 20 years. Additionally, Caterpillar (CAT) and GE Vernova (GEV) will provide specialized natural gas turbines to power the data center.

And they'll be busy...

Project Kilby is a massive data center, requiring about 2.7 gigawatts of power ‒ the equivalent demand of more than 2 million homes. Construction hasn't started just yet. Chevron said it plans to begin delivering power to Project Kilby in 2028.

Chevron will provide the gas using its own infrastructure – bypassing the electric grid. That's a good thing. As our colleague Dr. David "Doc" Eifrig wrote in the most recent issue of Income Intelligence last week, our power grid is undergoing a "stress test."

From Doc...

For most of the past 20 years, electricity demand in the U.S. barely grew. Energy efficiency gains offset population growth. And utilities companies could retire older coal plants without worrying too much about running short of power.

That calm period is ending.

Doc went on to highlight a few different reasons that electricity demand is picking up... like increased consumer use of things like air conditioning and the rise of electric vehicles. Put together, the numbers are staggering. More from Doc...

According to the International Energy Agency ("IEA"), electricity consumption by U.S. data centers reached 224 terawatt-hours ("TWh") in 2025, up 22% year over year.

By 2030, the IEA projects that data-center consumption will nearly double to about 426 TWh. That's enough electricity to power 40 million homes.

We highlighted AI's "power grab" back in February. AI's share of electricity demand has doubled over the past few years. It has even surpassed some of the estimates for its share of power demand for 2028. That's two years early.

As we wrote, some areas of the country are seeing more electricity demand than others. From that February Digest...

The story is even more pronounced in parts of the country with high data-center concentration, like "data-center alley" in northern Virginia, where these digital hubs made up 26% of all power demand in the region in 2023.

That's still the case today. And it's a big problem for PJM Interconnection – the largest U.S. power-grid operator, which covers 13 states, including our home base in Maryland. As Doc wrote...

According to its own reports, PJM's net energy demand is expected to reach a massive 1,438 TWh by 2036. However, the [North American Electric Reliability Corp.] says that PJM's reserve margins will likely fall below the required level starting in 2029.

Said another way, supply isn't going to catch up with data-center demand. So tech companies with big AI plans – like Microsoft – are scrambling to lock in energy to power their data centers.

That's great news for energy stocks...

So far in 2026, only two sectors have been "working" in the stock market. One is technology, given all the hype surrounding AI. But the other is energy.

As the Kobeissi Letter shared on X over the weekend, energy and AI stocks have added about $6.2 trillion in value this year – $6 trillion for AI and $200 billion for energy. The "rest" of the S&P 500 hasn't performed as well – losing $1 trillion in value.

Energy stocks are benefiting from deals like Microsoft and Chevron's. (Today, in another indication of rotation, the energy sector of the S&P 500 was up by 0.7%.) And this is far from the end of this trend... Tech companies will continue to need more and more power in the coming years.

That's leading to some huge investment opportunities...

Our colleague Chris Igou shared one with DailyWealth Trader subscribers today.

Chris noted that federal regulators are "laying the groundwork to limit the stress on the power grid while also speeding up the time it takes to get new data centers on line." And one part of data-center infrastructure is set to soar in demand.

Similarly, in last week's Income Intelligence issue, Doc recommended a high-yielding energy company trading at a huge discount that's perfectly positioned to take advantage of increased energy demand.

To be fair to Doc's paid subscribers, we can't give away the company's name in these pages. But existing subscribers and Stansberry Alliance members can access Doc's full write-up here.

If you're not a subscriber and want to read more of Doc and his team's work, you can learn more here.

New 52-week highs (as of 6/22/26): ABB (ABBNY), Altius Minerals (ALS.TO), Applied Materials (AMAT), Advanced Micro Devices (AMD), Alpha Architect 1-3 Month Box Fund (BOXX), Dick's Sporting Goods (DKS), iShares MSCI Emerging Markets ex China Fund (EMXC), iShares MSCI Spain Fund (EWP), Franklin FTSE Japan Fund (FLJP), Global X MSCI Greece Fund (GREK), iShares Convertible Bond Fund (ICVT), ChipMOS Technologies (IMOS), Intel (INTC), KraneShares Bosera MSCI China A 50 Connect Index Fund (KBA), Taiwan Semiconductor Manufacturing (TSM), Texas Instruments (TXN), and State Street Industrial Select Sector SPDR Fund (XLI).

In today's mailbag, feedback on the Digest and a thought on market concentration... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Hi, Thanks as always for the daily wrap up you provide.

"I just wanted to point out another example of the warped markets we are in. I was looking through my (limited) options of my employer retirement plan. With the S&P skewing heavily to Mag 7 and the concentrated risk of AI paying off, I thought it best to rebalance a little more into Vanguard Value (VTV) rather than Growth. I did a quick search on the holdings, and the top holding is MU [Micron] now! I guess you can't escape the tech/semiconductor concentration anymore." – Subscriber Beau E.

Corey McLaughlin comment: A timely note, Beau, given what we wrote about today.

And you get it. One of the things I suggest people do if they own or are buying index funds is to look – even just once – at the prospectus or do a quick "top holdings" search like you did to see what is actually in them. The answers can often surprise you.

All the best,

Corey McLaughlin and Nick Koziol
Baltimore, Maryland
June 23, 2026